FIIs may return to India; IT, BFSI, and pharma in focus, says Nuvama’s Shiv Sehgal

Foreign investor sentiment on India may be turning after a prolonged period of outflows, said Shiv Sehgal, President and Head at Nuvama Capital Markets.“If you look at the participation of the FIIs at the conference, one wouldn’t feel that India has been out of favour for the last couple of months… I wouldn’t be surprised, given the mood at the conference, that foreigners start nibbling back,” he said, speaking to CNBC-TV18 from the sidelines of the 21st Nuvama India Conference.

Sehgal said recent developments, such as trade deals, improving credit growth and positive channel checks, indicate that India may be moving out of a consolidation phase. He added that foreign buying could continue if sentiment improves.
In the IT sector, Sehgal said the segment has historically adapted to global disruptions and may recover after the recent correction.Also Read | BSE earnings hold despite STT hike; EMS gains from Budget, says Mayuresh Joshi

He said, “Indian IT, over the last two decades, has shown massive resilience… They can reinvent and adapt themselves at a very fast pace… I wouldn’t write off the sector just yet.”

He added that sentiment toward IT stocks is currently weak, which could create scope for recovery over the next two to three quarters.

On broader markets, Sehgal said investors need a long-term view to benefit from India’s growth cycle.

He said, “If you want to be bullish in India, you need to have conviction and patience. Real wealth creation in India will come from a long-term perspective.”He added that after correction in mid and small-cap stocks, the market is moving toward stock-specific investment strategies. According to him, India may transition from a broad market trade to a stock and sector selection-driven market.

Sehgal said banking and financial services remain key to economic growth. He noted that bank balance sheets are stronger and low corporate leverage supports credit growth. He said volume growth may offset margin pressure in the coming quarters.

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He also highlighted the pharmaceutical and healthcare sectors as key themes. Sehgal said stability in US generics pricing, China-plus-one supply chain shift and private hospital capex cycle could support growth.

On insurance, Sehgal said rising income levels may support long-term sector growth. He added that India may improve performance relative to other emerging markets after a period of underperformance.

Sehgal said India is expected to contribute a meaningful share to global economic growth over the coming years, which may support investment flows and sector re-rating.

For the full interview, watch the accompanying video

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